The Financial Services Authority (FSA) has been told to stop dragging its heels over financial scandals.

In the annual report of the watchdog regulators, the Financial Services Consumer Panel said the FSA was making progress.

This is despite the Treasury's unrealistic timetable for establishing a new financial regulator, which destroyed any chance of a much needed overhaul of financial services rules.

It said: “The FSA has advanced steadily in assembling the new regulator, producing a coherent regime.

“But the panel expresses concern about a number of details.”

The FSA was criticised for taking too long to identify and deal with problems with financial scandals related to the mis-selling of pensions and endowment mortgages. And it was urged to issue better guidance to firms on resolving cases.